Government Increases Electricity Prices

The IDR 55.1 trillion subsidy extended to the electricity sector may be fixed by the 2010 State Budget, but for electricity prices, the government may adjust the prices depending on the current situation, although this will require the approval of the House of Representatives. Recently, the government and the State Electricity Company (PLN) have decided to raise electricity prices by an average of 10% via Minister of Energy and Mineral Resources Regulation No. 7 of 2010 due to increased demand and to encourage the diversification of energy production sources.

The revised electricity rate regime for each category of consumer is set out in the regulation’s Attachments, with Attachments III and IV setting out the adjusted tariff for businesses and industry respectively.

However, the increased electricity rates will not apply to residential power consumers with electrical circuits handling between 450 and 950 volt-amperes (VA). In other words, prices will not be increased in the socioeconomic subcategory of consumers who would be most acutely affected by an increase.

The regulation additionally allows one-time pre-payments for electricity - to be administered and further detailed by the PLN - and briefly elaborates on other costs, including connection fees and late payment fees.

Although the regulation calls for improved customer service standards, it calls for a more specific policy to be determined at some later date by the Directorate General of Electricity and Energy Utilization of the Ministry of Energy and Mineral Resources.

The regulation repeals and replaces: (1) Minister of Energy and Mineral Resources Decision No. 2038 K/40/MEM/2001, and (2) Minister of Energy and Mineral Resources Decision No. 1616 K/36/MEM/2003. Both of which were regulations related to PLN electricity pricing.

The regulation has been in force since 1 July 2010.